European Central Bank (ECB) President Christine Lagarde said the institution is still on its feet for the issuance of a Central Bank Digital Currency (CBDC), with which they seek to counter the use of cash.
Lagarde’s statements came to be made during an interview conducted by the challenges, where the civil servant assured that residents of the European Union need faster and cheaper payments, especially when talking about international remittances within the region.
She stressed the need for the bank to adopt this technology and issue its own digital currency, even though a few months ago she issued certain warnings about the effects of Bitcoin on the region’s economy.
European Central Bank and a new digital currency
During the interview, Lagarde backed his allegations with a report published by the International Monetary Fund last year, in which the institution claimed that the average use of cash in 11 countries was declining by at least 1.3% annually. These changes come as demographic and social, as younger people are more inclined towards using alternate forms of digital money.
She said they assess the viability of a digital currency for the European Union, but that the biggest challenge they face is finding an incentive to motivate residents to use it. In this regard, Lagarde commented:
Substitute instruments linked to money from private banks’ deposits seem equally viable… Without an additional incentive, the CBDC would be as convenient as a bank debit card and would not offer improvements for users.
A more effective system
Among the properties that this new digital currency should have, Lagarde assured that one of the main aspects would come hand in hand with faster payment processing, which would benefit companies that want to streamline their financial processes.
The President of the European Central Bank also indicated that the initiative for a new currency will only make more sense if it does not undermine the work of private banks and their products currently in force:
The outlook for these initiatives by the European Central Bank should not discourage or displace private solutions driven by the retail payments market, which are also fast and efficient in the European area for all kinds of Customers.
